Clark County business leaders got a bleak preview of what they can expect from the 2011 Legislature at a Wednesday lunch panel in Vancouver hosted by the conservative Washington Policy Center.
They were warned to expect a hike in the state minimum wage, increases in unemployment and workers’ compensation premiums, and the same attitude toward spending from Democratic leaders in the state House and Senate.
“Any kind of a tax break is a long shot this year,” said state Rep. Ed Orcutt, R-Kalama.
One piece of good news, Orcutt said, is that voters last week reinstated a measure that requires a two-thirds vote of each legislative chamber to raise taxes. That means new taxes are off the table, he said.
But he predicted Democratic lawmakers will try to enact new fees instead, in a move to raise revenue and deal with a projected $4.5 billion to $5 billion budget deficit.
“I will be fighting them,” he said.
Orcutt said he’ll put effort into trying to help small businesses by opposing new state regulations. He took the first step in August, he said, when he wrote to Gov. Chris Gregoire, requesting a moratorium on rule making by state agency employees. That hasn’t happened.
He noted that by his count, the Department of Ecology alone has the equivalent of 43 full-time employees engaged in rule making, and said he’s trying to get statewide numbers. By reducing the number of workers on the state payroll, he said, he’s hopeful that “we’ll reduce the number of new rules,” though he added, “That alone won’t solve our budget problem.”
“If you see a regulation that’s making your job harder, let us know,” he said. “How do we get the obstacles out of your way? How do we free up the free market?”
Mark Johnson, lobbyist for the Washington Retail Association, said he was there to “stir the pot” and let business owners know what’s headed their way, including an increase in the minimum wage the nation’s highest, from $8.55 to $8.67 per hour, beginning in January.
He said some lawmakers are considering instituting a single sales tax rate for the entire state in place of the current system, which varies from one community to the next depending on the tax rates local governments levy.
Communities statewide could end up with a sales tax rate equal to Seattle’s, one of the state’s highest, he said.
Jason Mercier, an economist who directs the Center for Government Reform at the Olympia-based policy center, offered a tutorial on why the state will face a gaping deficit in 2011-13 despite an improving revenue picture.
The Democratic-controlled Legislature balanced the current operating budget by borrowing from its capital budget, using one-time federal stimulus money and suspending two voter-approved initiatives that fund education, Mercier said. It also deferred $700 million in deferred payments on its pension obligations.
In all, he said, the state needs to pay back about $2 billion.
“Unfortunately,” Mercier said, “the majority of the budget is off-limits,” including the constitutionally mandated funding of basic education and the state’s share of Medicaid payments, a federal-state entitlement.
Senate Democrats don’t seem to get voters’ message that they can’t count on new revenue, Mercier said. Although they don’t have the votes to increase taxes, he said, some are suggesting they could send a referendum to voters next year asking them to boost revenue to maintain existing programs.
Mercier called for taking away the governor’s right to conduct collective bargaining with public employee unions and for repealing the two education initiatives, which he said take education funding out of the hands of lawmakers.
“The Legislature needs to be in charge of education,” he said.
